Early next year, the U.S. is on pace to once again hit its debt ceiling, the statutory borrowing limit imposed by Congress. When the U.S. neared its debt limit in 2011, House Republicans took it hostage, demanding spending cuts and forcing the first credit downgrade in U.S. history due to their intransigence on taxes.
That the U.S. faces periodic standoffs over the debt ceiling is a problem entirely of Congress’ own creation. The debt ceiling didn’t even exist until 1917, and serves little practical purpose. During an interview on Bloomberg Television, Treasury Secretary Tim Geithner acknowledged as much, saying that the U.S. should abolish the debt ceiling entirely:
Treasury Secretary Timothy Geithner said the U.S. “absolutely” should get rid of the debt ceiling as soon as possible.
“It would have been time a long time ago to eliminate it,” Geithner told Bloomberg TV on Friday. “The sooner the better.”
Geithner did not commit to personally doing anything to eliminate the nation’s legal limit on borrowing. When pressed on the issue, Geithner told Bloomberg TV: “This is only something only Congress can solve. Congress put it on itself.”
As the American Prospect explained last year, “experts — including former Office of Budget and Management and Treasury officials, congressional staffers, and CBO employees — have suggested in the past, and are suggesting now, replacing the debt ceiling with debt targets for lawmakers to work under.” Certainly, in its current form, the debt ceiling does nothing but give the minority party a chance to manufacture a crisis every time it needs to be increased.